the economics of money, banking, and financial markets

(Sean Pound) #1
840 $
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  1. If a negative aggregate demand shock occurs and monetary policy is not credible then
    ____.
    A) economic activity will decrease
    B) the equilibrium interest rate will rise
    C) there will be a corresponding autonomous increase in inflation
    D) none of the above
    Answer: A
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  2. A negative aggregate demand shock will only impact ____.
    A) the equilibrium interest rate
    B) the equilibrium inflation rate
    C) the short run aggregate supply curve
    D) none of the above
    Answer: D
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  3. An example of a negative aggregate demand shock is ____.
    A) a global carbon cap-and-trade program
    B) a global financial crisis
    C) a decrease in the price of oil
    D) thermonuclear war
    Answer: B
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  4. The difference in outcomes occurring with a credible nominal anchor and without one, given
    a negative aggregate demand shock is that ____.
    A) with the credible policy there is no shift in the aggregate supply curve
    B) there is no difference but credibility provides national security
    C) without credible policy, inflation will continue to spiral upwards
    D) with credible policy, the aggregate supply curve shifts back quickly
    Answer: A
    Diff: 2 Type: MC Page Ref: 626
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates



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